In a monthly survey of REALTORS®, respondents are asked “Compared to the same month last year, how would you rate the past month’s traffic in neighborhood(s) or area(s) where you make most of your sales?” Respondents rate seller traffic as “Stronger” (100), “Stable” (50), or “Weaker” (0) and the responses are compiled into a diffusion index. An index greater than 50 means that more respondents reported “stronger” than “weaker” conditions.

REALTORS® reported slower homebuying activity in July 2018, according to the  July 2018 REALTORS® Confidence Index Survey. The REALTORS® Buyer Traffic Index registered at 62, down from the same month one year ago (69). This is the fifth straight month (since March 2018) that Realtors® reported a decline in buyer activity compared to conditions one year ago. The decline in the REALTORS® Buyer Traffic Index mirrors the trend in NAR’s tally of existing home sales that showed a year-over-year decline in sales since March 2018.

NAR also asks REALTORS® about current market conditions and the outlook in the next six months in the single-family homes market. Both the REALTORS® Confidence Index: Single-family Current Conditions and the REALTORS® Confidence Index: Single-family 6-Month Outlook also declined compared to one year ago.

The indices are still all above 50, which means that there are more respondents who reported a stronger than a weaker market for the reference month compared to conditions one year ago. However, a lower index means a smaller fraction of respondents reported a stronger market (than a weaker market) in their business area.

The increase in the mortgage rates and higher home prices since January 2018, have combined to make a home purchase less affordable. Freddie Mac’s contract 30-year fixed mortgage rate rose from an average of 4.03 percent in January to a peak of 4.59 percent in May 2018 and stood at 4.53 percent in July 2018, while the median price of existing homes rose from $240,800 in January 2018 and peaked to $273,800 in June 2018, then slid slightly to $269,600 in July.

Assuming a 10 percent down payment[1], the monthly mortgage rose from $1,030 in January 2018 to $1,233 in July 2018 (increase of $233/month). The mortgage payment is still affordable —at 15 percent of the estimated household income of a 2-wage earner family (933/week/earner)—but this is slightly up from 13 percent in January 2018. Households whose housing expense make up more than 30 percent of income are considered cost-burdened.[2]

Mortgage rates eased somewhat in July 2018, to 4.53 percent, from a peak of 4.59 in May 2018, while the median price of an existing home also decreased to $ 269,600 from $273,800 in June 2018, leading to a slight decrease in mortgage payment in July 2018 from June 2018.

With the unemployment rate at 3.9 percent and core inflation at 2.4 percent in July 2018, the expectation is a continued gradual increase in the federal funds rate, which will also bump up mortgage rates. NAR Chief Economist forecast the 30-year mortgage rate to average 4.6 percent in 2018 and 5.1 percent in 2019.

Estimate of Impact of Higher Mortgage Rate on Existing Home Sales

Higher mortgage rates tend to dampen home sales, as shown during the period when mortgage rates rose in mid-2013 (‘taper tantrum’ period) and starting in the fourth quarter of 2016 as the Federal Operations Market Committee embarked on a gradual increase in the federal funds rate in line with its mandate to foster growth and to keep inflation near two percent. Home sales have remained essentially flat since the fourth quarter of 2016 given the series of gradual rate increases.

De Fusco and Paciorek (2014) estimated that a one percentage point increase in mortgage rates decreases mortgage demand by 2.5 percent.[3] Using this elasticity, I estimated that the 72 basis point increase in 30-year fixed rate mortgage in September 2017 and July 2018 reduced existing home sales by an annualized rate of 100,000 units (from 5.37 million to 5.27 million annualized sales).  The seasonally adjusted annual home sales in July 2018 was 5.34 million. The unexplained difference (5.34 million less 5.27 million) may be due to other factors that boosted demand, such as an increase in employment.

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[1] The median amount financed is 90 percent, according to NAR’s 2017 Home Buyers and Sellers Report; https://www.nar.realtor/sites/default/files/documents/2017-profile-of-home-buyers-and-sellers-11-20-2017.pdf

[2] HUD, Rental Burdens: Rethinking Affordability Measures, https://www.huduser.gov/portal/pdredge/pdr_edge_featd_article_092214.html

[3] De Fusco and Paciorek, The Interest Rate Elasticity of Mortgage Demand: Evident from Bunching at the Conforming Loan Limit, https://www.federalreserve.gov/pubs/feds/2014/201411/201411pap.pdf

Source: NAR Economic Outlook

• NAR released a summary of pending home sales data showing that July’s pending home sales pace was down 0.7 percent last month and fell 2.3 percent from a year ago.
• Pending sales represent homes that have a signed contract to purchase on them but have yet to close. They tend to lead existing-home sales data by 1 to 2 months.
• All four regions showed declines from a year ago. The South had the smallest dip in pending sales of 0.9 percent. The West had the biggest drop in sales of 5.8 percent. The Northeast fell 2.3 percent followed by the Midwest with a decline of 1.5 percent.
• From last month, two of the four regions showed inclines in sales. The Midwest region had the smallest gain of 0.3 percent followed by the Northeast, which rose 1.0 percent. The South had a decline of 1.7 percent followed by the West with a drop of 0.9 percent.
• The U.S. pending home sales index level for the month was 106.2. June’s data was revised up to 107.0.

• In spite of the decline, this is the pending index’s 51st consecutive month over the 100 level.
• The 100 level is based on a 2001 benchmark and is consistent with a healthy market and existing-home sales above the 5 million mark.

Source: NAR Economic Outlook

Amid tight supply, home prices are still increasing although at a slower pace. Nationally, the median price of existing homes sold in July 2018 rose to $269,600, up 4.5% from one year ago, but slower than the 5.7% appreciation in 2017.

As another indicator, the median list prices of homes listed on Realtor.com increased in 405 out of 500 metro areas on a year-on-year basis, fewer than the 423 metro areas in July 2017. The number of metro areas with higher year-on-year median list price has been trending down since March 2018 (except in June).

The table below shows the change in median list price on Realtor.com in July 2018 compared to one year ago. Among the largest metro areas, the median list prices declined in July 2018 from one year ago in Washington-Arlington-Alexandria, DC-VA-MD-WV (-1.6%), Denver-Aurora-Lakewood, CO (-8.8%), Austin, Round Rock, TX (-3.3%), Greenville-Andersen-Mauldin, SC

(-1.1%), Urban Honolulu, HI (-0.6%), and Cape Coral-Fort Myers FL (-3.2%). Several metro areas in California also had year-on-year declines: Salinas, Sta. Maria-Sta. Barbara, Madera, Truckee-Grass Valley, and Eureka-Arcata-Fortuna.

However, the median list price continues to increase on a year-on-year basis in the high-cost metro areas of California such as Los Angeles-Long Beach-Anaheim (4.3%), San Francisco-Oakland-Hayward (5.7%), San Jose-Sunnyvale, CA (16.5%). The median list price also rose in New York-Newark-Jersey City (11.5%), Atlanta-Sandy Springs, GA (10.3%), and Seattle-Tacoma-Bellevue, WA (14.4%).

Scroll down the data visualization table below or type in a specific metro area name in the box.

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The map below shows where median list prices on Realtor.com declined in July 2018 compared to one year ago (blue areas on the map). Scroll down the table or hover over the map to view the historical median list price trend.

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Tight inventory continues to push up prices of existing homes for sale, although at a moderate pace compared to past years. Nationally, the median price of existing homes sold in July 2018 rose to $269,600, up 4.5% from one year ago (vs. 5.7% appreciation in 2017). Adjusted for inflation, home prices rose 1.5 percent. As of July 2018, the nominal median home price ($269,600) is 17% higher than the bubble-era peak price ($230,400), but the inflation-adjusted price ($184,222) is still 6% below the corresponding inflation-adjusted price of the nominal peak level ($194,963).

 

 

Source: NAR Economic Outlook

Home price appreciation is an important topic in today’s economy. Using data from the American Community Survey (ACS), we can analyze the gains and losses of property values over time. I estimated the median property values by state in 2017 using the FHFA index and the median property values from the (ACS). I then calculated the growth rate from 2005 -2017. [1]

The states with the highest estimated median property values in 2017 are Hawaii ($637,892), District of Columbia ($605,756), California ($522,431), Massachusetts ($396,992), and Colorado ($342,967).

The states with the lowest estimated median property values in 2017 are Alabama ($141,714), Oklahoma ($137,387), Arkansas ($129,902), West Virginia ($122,791) and Mississippi ($118,019).

On a regional level, the estimated price growth appears to be the strongest in the South, West, and Midwest. Price growth is weakest in the Northeast states. Overall, all regions are displaying growth in property values with only a few states showing no growth or loses. Below is a breakdown of the Census four regions by state.

• In the South, which typically leads all regions in sales, Texas led the region with 63 percent estimated price growth from 2005 to 2017. Although Florida experienced strong price growth since 2012, home prices have only increased by 14 percent since 2005 when house prices were still generally at peak levels.

• In the West, the least affordable region [2], Montana led all states with 71 percent price growth from 2005 to 2017. Despite the strong price growth in California since 2012, prices have only increased by 9 percent since 2005. Nevada shows a negative 5 percent price change over this time.

• In the Midwest where affordability is most favorable, North Dakota led all states with 111 percent price growth from 2005 to 2017. The increase is likely due to the boom in shale oil production up until 2014 when oil prices started collapsing. Illinois, while having the smallest growth in the region had an estimated 7 percent price growth over this time.

• In the Northeast where price growth is typically slow, Pennsylvania lead the region with a 40 percent price growth from 2005 to 2017. Rhode Island was the only state to have a decline of negative 4 percent price change over this time.

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[1] I used the FHFA expanded data set, not seasonally adjusted data.

[2] Based on NAR housing affordability index

Source: NAR Economic Outlook

In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® asks members “In the neighborhood or area where you make most of your sales, what are your expectations for residential property prices over the next year?”

Among the REALTOR® respondents who responded to the January 2018 survey, the median expected price change for the next 12 months was 3.6 percent, according to the  January 2018 REALTORS® Confidence Index Survey.[1] In December 2017, the median expected price change was 3.1 percent. Strong buyer traffic amid low supply of homes coming into the market continues to push up home prices. In January 2018, the median price of existing homes sold rose to $240,500, up six percent from one year ago.

The map below shows the median expected price change of the respondents in the next 12 months at the state level based on surveys conducted during November 2017—January 2018. The highest median expected price growth of more than five to seven percent was in Washington, Nevada, and Wyoming.

In Oregon, Idaho, Utah, Arizona, Colorado, and Florida, the median expected price growth was four to five percent. REALTORS® reported stronger buyer traffic in these states compared to one year ago, based on the RCI Buyer Traffic Index, while the number of homes for sale has remained essentially unchanged, based on the RCI Seller Traffic Index.

In states with high property tax rates or property prices, such as New York, New Jersey, Connecticut, and California—states which are the most affected by the Tax Cuts and Jobs Act that put a cap on total itemized deductions property and state and local taxes — the median expected price change among respondents was two to three percent.[2]

Lack of supply amid strong buyer interest continues to push prices up. At the metro area level, data on the number of active listings on Realtor.com indicates how serious the lack of supply is. Of the 500 metro areas tracked by Realtor.com, active listings are lower compared to one year ago in 395 out of 500 metro/micro areas, 80 percent. Areas in red show active listings are lower compared to one year ago, while areas in blue have more active listings.

Source: NAR Economic Outlook

In a monthly survey of REALTORS®, respondents are asked “Compared to the same month last year, how would you rate the past month’s traffic in neighborhood(s) or area(s) where you make most of your sales?” Respondents rate buyer traffic as “Stronger” (100), “Stable” (50), or “Weaker” (0) and the responses are compiled into a diffusion index. An index greater than 50 means that more respondents reported “stronger” than “weaker” conditions.

The chart below shows buyer traffic conditions in November 2017–January 2018 compared to conditions one year ago, according to the  January 2018 REALTORS® Confidence Index Survey.  Except in two states, REALTORS® reported that buyer conditions were “stable” (unchanged) to “very strong” compared to conditions one year ago, including in the District of Columbia (unchanged).[1]  The states with the strongest buyer traffic are Washington, Idaho, Nevada, and Utah. Respondents from Texas and Florida, states which were hit by hurricanes Harvey and Irma, generally reported “strong” buying activity compared to one year ago. On the other hand, REALTOR® respondents from Alaska and West Virginia respondents generally reported “weak” buyer traffic compared to one year ago, and this may be related to the effect of the slump in oil prices since 2015, though oil prices have started to firm up again in 2017 as OPEC cut its oil production.

In contrast, only five states have “strong” supply conditions in November 2017–January 2018 compared to one year ago: Alaska, North Dakota, Nevada, Rhode Island. and Utah. In many states, seller conditions have remained “stable” compared to one year ago, which means that the level of supply has not changed compared to one year, even if demand has been increasing. In 22 states, supply conditions are “weak” compared to one year ago.

At the metro area level, data on the number of active listings on Realtor.com indicates how serious the lack of supply is. Of the 500 metro areas tracked by Realtor.com, active listings are lower compared to one year ago in 395 out of 500 metro/micro areas, 80 percent. Areas in red show active listings are lower compared to one year ago, while areas in blue have more active listings.

Nationally, the REALTORS® Buyer Traffic Index registered at 69 (66 in December 2017; 63 in January 2017), while the REALTORS® Seller Traffic Index was at 44 (47 in December 2017; 41 in January 2017). An index above 50 indicates that more respondents reported stronger than weaker conditions compared to one year ago, so the data indicates that homebuying demand continues to outpace supply.

Source: NAR Economic Outlook

Amid strong demand and tight supply, REALTORS® reported that properties that sold in January 2018 were typically on the market for 42 days, down from 50 days compared to the same month last year, according to the  January 2018 REALTORS® Confidence Index Survey.[1] The median days on market have been broadly on a downtrend since 2011 when the properties typically were on the market for three months from May 2011, when this question was first asked in the RCI Survey, through March 2012.

During the November 2017–January 2018, properties typically sold within one month in Washington, California, Nevada, Utah, Colorado, Nebraska, Minnesota, Michigan, Kentucky, New Hampshire, Massachusetts, and the District of Columbia.

 

With fewer listings for sale in many areas, properties continued to sell at a faster pace in many metro areas. Of the 500 metro areas tracked by Realtor.com, active listings are lower compared to one year ago in 395 out of 500 metro/micro areas, 80 percent. With fewer listings, days on market have also dropped in 398 areas.

 California, Washington, and Utah are home to the metro areas where properties are selling at the quickest time, based on how long they were listed on Realtor.com: San Jose-Sunnyvale-Sta. Clara, CA (27 days), San Francisco-Oakland-Hayward, CA (35 days), Vallejo-Fairfield, CA (44 days), San Diego-Carlsbad, CA (45 days), Seattle-Tacoma-Bellevue (48 days), Iowa City (48 days), Santa Rosa (49 days), Provo-Orem, UT (50 days), an Los Angeles, CA (50 days).

Use the data visualization below to check out the data across metro areas.

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Source: NAR Economic Outlook

In a monthly survey of REALTORS®, the survey asks buyer’s agents about the characteristics of their most recent sale for the month. The survey asks, “Was there a contingency?”

According to a survey of REALTORS® who responded to the  January 2018 REALTORS® Confidence Index Survey, 76 percent of buyer’s agents who closed a sale in January 2018 reported that the closed sale had a buyer contingency.

Home inspection was the most common contingency, reported by 58 percent of buyer’s agents who reported a buyer contingency.[1] Getting the correct appraisal and obtaining financing were the next most common buyer contingencies, which were reported by nearly four in ten of buyers’ agents who closed a sale.

Buyers’ contingencies are a safeguard for buyers, and as the data shows, most contracts that closed do have a buyer contingency.  So as a buyer’s agent assisting a buyer nail a home in this seller’s market, don’t skip out on including a contingency that safeguards the buyer’s interest. You won’t be the odd man out.

Source: NAR Economic Outlook

Lack of homes available for sale and the concomitant rise in prices appears to be sidelining many first-time potential homebuyers in 2018. In the first two months of 2018, first-time buyers made up only 29 percent of home buyers compared to 32 percent in the same period one year ago, according to the February 2018 REALTORS® Confidence Index Survey.[1]  

The share of affordable properties continues to trend downwards. According to Realtor.com data, 43.8 percent of properties were listed at $250,000 or below in February 2018, compared to 75 percent in May 2012.

Home prices continue to increase in many areas amid lack of supply. The West region has the hottest real estate prices, led by San Jose-Sunnyvale-Sta. Clara, with the median listing price on Realtor.com, at $1.2 million in February 2018, up 26.4 percent from one year ago. The median home price is more affordable in Seattle-Tacoma-Bellevue, with the median list price at $527,520, but listing prices in this area have also been rising strongly, 29 percent in February 2018 from one year ago.

Even in states with comparatively high property taxes, listing prices are still rising. In New York-Newark-New Jersey, listing prices were up by 14 percent in February 2018 compared to one year ago. Listing prices were also up in the Northeast region metro areas of Massachusetts, Rhode Island, and Connecticut.

Use the data visualization below to check out the prices across metro areas based on Realtor.com data.[2]

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Amid rising home prices, first-time buyers are likely finding it hard to make a home purchase. Table 1 below shows the principal, interest, taxes, mortgage insurance, and home maintenance (PITIM) payments at various down payment levels, and the share of these housing costs to the typical household income of a 25 to 34 years old-headed household, at $62, 993.

At 3.5 percent downpayment, the monthly mortgage debt-to-income ratio is about 23 percent. Adding on other housing expenses for mortgage insurance, taxes, and maintenance, the share of housing costs to income rise to 34 percent of income, exceeding the 30 percent threshold that characterizes cost-burdened households. With a 20 percent downpayment, the share of housing costs to income decreases to 27 percent, but this means making a larger downpayment of $48,340, which may be a hurdle to meet for young households who may also be paying student debt and who do not yet have this level of savings. According to the Federal Reserve Board’s 2016 Survey of Consumer Finances, the average savings of non-homeowners was $5,200 in 2016.[3]

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[1]NAR’s 2017 Home Buyers and Sellers Report (HBS) reported the share of first-time buyers at 34 percent. The HBS report is survey of homebuyers who purchased the home for primary residence, while the NAR RCI Survey is a survey of REALTORS® who reported sales for primary and non-primary residential use of the buyer.

[2] Realtor.com data is freely available to the public at https://www.realtor.com/research/data/.

[3] Relaxed gifting standards within reasonable underwriting guidelines can also make a home purchase more affordable. For example, Fannie Mae allows all the down payment for one-unit principal residence property mortgages with loan-to-value of greater than 80 percent (or down payment of 19 percent or less) to come from eligible givers (persons related by blood or marriage, fiancé, fiancée, or domestic partner.[3]  Freddie Mac allows gifts/grants after the borrower puts in a three percent down payment.[3] The Federal Housing Administration allows the 3.5 percent down payment to come from acceptable donors (relatives, employer, friend, charitable organization, government agency) for borrowers with credit score of at least 620. However, if credit score is between 580 and 619, the down payment must be the borrower’s own money (required minimum investment).  The builder, seller, or an associated entity to the transaction may not provide gifts.

Source: NAR Economic Outlook

• NAR released a summary of pending home sales data showing that January’s pending home sales pace was down 4.7 percent last month and down 3.8 percent from a year ago.
• Pending sales represent homes that have a signed contract to purchase on them but have yet to close. They tend to lead existing-home sales data by 1 to 2 months.
• All four regions showed declines from a year ago. The Northeast had the biggest drop in sales of 12.1 percent. The Midwest had a drop of 4.1 percent.  The West declined 2.5 percent followed by the South that had a dip of 1.1 percent.
• From last month, all four regions showed declines in sales. The West had a decline of 1.2 percent followed by the South with the dip of 3.9 percent. The Midwest had a drop of 6.6 percent followed by the Northeast with the biggest decline of 9.0 percent.
• The U.S. pending home sales index level for the month was 104.6. December’s data was revised down slightly to 109.8.

• In spite of the decline, this is the pending index’s 45th consecutive month over the 100 level.
• The 100 level is based on a 2001 benchmark and is consistent with a healthy market and existing-home sales above the 5 million mark.

Source: NAR Economic Outlook

In a monthly survey of REALTORS®, the survey asks, “Compared to the original listing price, at how much of a net discount or net premium did the property sell?”

According to a survey of REALTORS® who responded to the  January 2018 REALTORS® Confidence Index Survey, 34 percent of properties that closed in January 2018 sold at or above the list price. One year ago, 31 percent sold at or above the list price, and during the months of January in 2012 through 2015, about one in four sold at or above the list price. Buyer demand continues to outpace supply of homes being listed for sale in the market, sustaining the upward pressure on home prices.

According to respondents who reported closing a sale, 11 percent of properties sold at a net premium in January 2018, the same share in 2017, but seemingly an increase from the nine percent share in 2014 and 2015. Of properties that sold at a premium, 86 percent sold at 101 to 110 percent of the list price.

Lack of inventory, which has pushed up prices, continues to erode home affordability.  At the current sales’ pace, the inventory of homes for sale in January 2018 will be exhausted in 3.2 months, well below the norm of six months that keeps demand and supply at a healthy balance. Since 2012, median home prices have cumulatively increased by 56 percent, nearly four times the 14 percent cumulative change in earnings during the same period.

Source: NAR Economic Outlook

In a monthly survey of REALTORS®, the survey asks “Think of your most recent sales contract in the past 3 months that was either closed or terminated. Please explain how the deal concluded.”

The responses indicate that more contracts are being settle on time. Of the REALTORS® who responded to the  January 2018 REALTORS® Confidence Index Survey and who reported a sales contract that either closed or terminated in January 2018, 75 percent reported that the contract was settled on time. The share of respondents who reported that contracts closed on time has trended upwards in 2017. For comparison, only 65 percent reported that the contract closed in time in the March 2015 survey. With more contracts closed on time, the share of respondents who reported that a contract was delayed has declined to 22 percent (from 26 percent in March 2015), while the share of contracts that were terminated decreased to three percent (from nine percent in March 2015).

 Among delayed contracts, “issues related to financing” was the most common problem, accounting for 30 percent of delayed contracts. “Other” accounted for 24 percent, but an examination of the responses reveals that this also includes cases lender delays. Home inspection/environmental issues accounted for 19 percent of delayed contracts, followed by appraisal issues at 16 percent.

Cases of delay related to appraisal appears to be declining since the second half of 2017, when appraisals accounted for 26 percent of delayed settlements. The decline in appraisal issues may be related to the introduction of Fannie Mae and Freddie Mac of their appraisal-free mortgage program for purchase loans which both GSEs launched on September 1, 2017.  However, there are certain conditions for appraisal-free home purchase mortgage applications. Both GSEs require a loan-to-value ratio of up to 80 percent and the loan application must have passed the automated underwriting platforms (Desktop Underwriter© for Fannie Mae[1] and Loan Product Advisor© for Freddie Mac.[2] The loan is only for single-family residences, either primary or secondary residence.

Source: NAR Economic Outlook

• NAR released a summary of existing-home sales data showing that housing market activity this January fell 3.2 percent from last month and dipped 4.8 percent from last year. January’s existing home sales reached 5.3 million seasonally adjusted annual rate.
• The national median existing-home price for all housing types was $240,500 in January, up 5.8 percent from a year ago. This marks the 71st consecutive month of year over year gains.
• Regionally, all four regions showed growth in prices from a year ago, with the West leading all regions with an incline of 8.8 percent. The Midwest had a gain of 8.7 percent followed by the Northeast with a gain of 6.8 percent. The South had the smallest gain of 4.3 percent from January 2016.

• January’s inventory figures are up 4.1 percent from last month to 1.52 million homes for sale. Fewer homes available with inventory down 9.5 percent from a year ago, marking 32 months of year over year declines. It will take 3.4 months to move the current level of inventory at the current sales pace. Transactions are moving faster and it takes approximately 42 days for a home to go from listing to a contract in the current housing market, down from 50 days a year ago.

• From December, all four regions experienced declines in sales. The Midwest had the biggest decline of 6.0 percent followed by the West with a drop of 5.0 percent. The Northeast dipped 1.4 percent followed by the South which had the smallest drop of 1.3 percent.
• All four regions showed a decline in sales from a year ago. The South had the smallest drop in sales of 1.3 percent. The Midwest had a decline of 3.8 percent followed by the Northeast, which fell 7.6 percent. The West had the biggest dip of 9.5 percent. The South led all regions in percentage of national sales, accounting for 42 percent of the total, while the Northeast had the smallest share at 13.6 percent.

• In January, single-family sales decreased 3.8 percent and condominiums sales rose 1.6 percent compared to last month. Single-family home sales fell 4.8 percent and condominium sales were down 4.6 percent compared to a year ago. Both single-family and condominiums had an increase in price with single-family up 5.7 percent at $241,700 and condominiums up 7.1 percent at $231,600 from January 2016.

Source: NAR Economic Outlook

The REALTORS® Confidence Index (RCI) survey[1] gathers monthly information from REALTORS® about local real estate market conditions, characteristics of buyers and sellers, and issues affecting homeownership and real estate transactions.[2] This report presents key results about market transactions from January 2018. View and download the full report here.

Market Conditions and Expectations

• The REALTORS® Buyer Traffic Index registered at 69 (63 in January 2017). [3]
• The REALTORS® Seller Traffic Index registered at 44 (41 in January 2017).
• The REALTORS® Confidence Index—Six-Month Outlook Current Conditions registered at 74 for detached single-family, 61 for townhome, and 60 for condominium properties. An index above 50 indicates market conditions are expected to improve.
• Properties were typically on the market for 42 days (50 days in January 2017).
• Eighty-nine percent of respondents reported that home prices remained constant or rose in January 2018 compared to levels one year ago (88 percent in January 2017).

Characteristics of Buyers and Sellers

• First-time buyers accounted for 29 percent of sales (33 percent in January 2017).
• Vacation and investment buyers comprised 17 percent of sales (16 percent in January 2017).
• Sales of distressed properties (foreclosed or sold as a short sale) accounted for five percent of sales (seven percent in January 2017).
• Cash sales made up 22 percent of sales (23 percent in January 2017).
• Twenty percent of sellers offered incentives such as paying for closing costs (nine percent), providing a warranty (nine percent), undertaking remodeling (three percent), and providing appliances (one percent) [4]

Issues Affecting Buyers and Sellers

• From November 2017–January 2018, 75 percent of contracts settled on time (67 percent in January 2017).
• Among sales that closed in January 2018, 74 percent had contract contingencies. The most common contingencies pertained to home inspection (58 percent), getting an acceptable appraisal (44 percent), and obtaining financing (43 percent).
• REALTORS® report “low inventory” and “interest rate” as the major issues affecting transactions in January 2018.

About the RCI Survey

• The RCI Survey gathers information from REALTORS® about local market conditions based on their client interactions and the characteristics of their most recent sales for the month.
• The January 2018 survey was sent to 50,000 REALTORS® who were selected from NAR’s 1.3 million members through simple random sampling and to 7,120 respondents in the previous three surveys who provided their email addresses.
• There were 3,595 respondents to the online survey which ran from February 1‒8, 2018. The survey’s overall margin of error at the 95 percent confidence level is two percent. The margins of error for subgroups and sample proportions of below or above 50 percent are larger.
• NAR weighs the responses by a factor that aligns the sample distribution of responses to the distribution of NAR membership.

The REALTORS® Confidence Index is provided by NAR solely for use as a reference. Resale of any part of this data is prohibited without NAR’s prior written consent. For questions on this report or to purchase the RCI series, please email: Data@realtors.org

Source: NAR Economic Outlook